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The Role of Resources in Success and Survival of a New Venture - Literature review Example

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The paper is a critical analysis of the fact that even though entrepreneurial activities and new ventures are started with limited resources, their survival heavily depends on several other resources which are not easily accessible. The paper evaluates various literature articles in this regard…
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The Role of Resources in Success and Survival of a New Venture
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Download file to see previous pages Cooper, Gimeno-Gascon, and Woo (1991) determined that about 36 percent of new business ventures failed and 50 percent pulled through marginally and only 14 percent witnessed rapid growth.  Accordingly, exploration of hindrances in growth opportunities became a critical subject for most entrepreneurial researches (Shane and Venkataraman, 2000).
In this context, Shelton (2005) has proposed the concept of scale barriers to shedding some light on the issues related to the growth of the new venture. Primarily, there are three kinds of resources that are necessary for the growth of a firm, namely, financial resources, competitive position and management, and organizational capability. Start-up firms are generally small in size and practically inexperienced in an industry. Consequently, they experience resource deficiencies in various functional areas due to a small size and lack of sufficient knowledge of the industry. Shelton (2005) defined all these deficiencies as scale barriers which have a significant negative impact on the growth of new firms. Therefore, growth in new ventures can be illustrated as a process of conquering various scale barriers that develop as a result of liabilities such as newness and smallness.
Inexperienced position and small size of start-up firms can be related to resource deficiencies, whose dimensions are not only limited to ignorance but also include lack of key strategic and organizational resources (Shepherd, Douglas, and Shanley, 2000). The authors proposed a model where they suggested that an entrepreneur generally influences the growth of a new venture on the basis of limited yet critical resources while the unavailable resources are listed as additional scale barriers. The entrepreneur needs to overcome these barriers to establish a mature and successful organization (Shepherd, Douglas, and Shanley, 2000). ...Download file to see next pagesRead More
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